“I am proud of what we have achieved in building the Napier Brown business and expanding its customer base and developing its supply chain,” said Pieter Totté, RGF executive chairman, commenting on the £34M deal.
“However, the changes taking place within the European sugar market mean that the future of this business is best served by it becoming part of an international production group.
“We believe Tereos is the best choice for both customers and employees. This transaction will allow us to focus all our resources on the continued growth of our remaining businesses. I would like to thank the staff and employees for their contribution over the years.”
Sugar production declining
UK sugar production has been declining and the market has become increasingly dependent on imports, said RGF.
In a statement on the sale, the company said: “The directors believe that in the post-quotas era, Napier Brown’s interests would be best served by having a direct integration with a sugar producer.
“Napier Brown has an important role in providing imports to the UK market, but in order to operate effectively, it needs to ensure high quality, cost effective and reliable sources of sugar.
“Accordingly, the company has concluded that the sale to Tereos is in the best interests of the company and Napier Brown.”
RGF said Napier Brown was Europe’s largest non-refining sugar distributor, sourcing sugar from the UK as well as importing from mainland Europe and the rest of the world. It supplies industrial, retail, wholesale and foodservice customers, operating a commercial and retail packing site in Normanton, West Yorkshire, and a sugar hub at Stallingborough, North Lincolnshire.
The business operates under the brands Napier Brown and Whitworths Sugar, the latter supplying a range of ‘everyday’ sugars and premium sugars under the ‘Whitworths for Baking’ sub-brand for consumers.
According to RFG, cooperative Tereos is the world’s fifth-largest sugar group, specialising in processing sugar beet, sugar cane and cereals and trading strongly in the alcohol and starch derivatives markets. It has 42 industrial sites and employs 24,000 people across four continents, clocked up revenues of €4.7bn (£3.4bn) in 2013–14 and unites 12,000 cooperative growers.
The organisation recently announced it would increase its French sugar production by 20% following the end of quotas from 2017 and is the largest sugar producer in France.
Under the terms of the acquisition, Tereos will pay £34M, plus net working capital.
In the year to March 31, 2014, Napier Brown chalked up revenue of £172M and a pre-tax loss of £3M, RGF claimed.
Subject to shareholder approval, RGF expects to complete the transaction on May 15.